ACIT, New Delhi V. Shri Ashok Chadha, New Delhi

ITA 4075/DEL/2010

• Counselvise Citation: [2011] 135 COUNSELVISE.COM (IT) 0370 (ITAT-DELHI)
• Duration Of Justice: 5 month(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-02-2011
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 02-02-2011
• Assessment Year: 2005-2006
• Appeal Filed On: 01-09-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ANUSHA KHURANA
• Assessee Lawyers: CHANDER SHEKAR
• Keywords: Capital Gains
• Section: 271(1)(c)

Judgement Text

I.T.A. NO.4075 /DEL/10 1/5 IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH A NEW DELHI) BEFORE SHRI R.P. TOLANI, JUDICIAL MEMBER AND SHRI A.K. GARODIA, ACCOUNTANT MEMBER I.T.A. NO.4075 /DEL/2010 ASSESSMENT YEAR : 2005-06 ACIT , SHRI ASHOK CHADHA, CIRCLE-48(1), E-372, IST FLOOR, NEW DELH. V. GK PART-1, NEW DELHIK. (APPELLANT) (RESPONDENT) APPELLANT BY : MS. ANUSHA KHURANA, SR. DR. RESPONDENT BY : SHRI CHANDER SHEKAR, C.A. ORDER PER A.K. GARODIA, AM: THIS IS REVENUE'S APPEAL FILED AGAINST THE ORDER OF LD CIT(A)-XXX, NEW DELHI DATED 21.6.2010 FOR ASSESSMENT YEAR 2005-06. 2. THE GROUNDS RAISED BY THE REVENUE ARE AS UNDER:- ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD CIT(A) HAS ERRED IN:- I) DELETING THE PENALTY AMOUNTING TO `.5,90,175/- RIGH TLY IMPOSED BY THE ASSESSING OFFICER U/S 271(1)(C) FOR FURNI SHING INACCURATE PARTICULARS OF INCOME NOT CONSIDERING THE FACT THAT THE ASSESSEE WOULD HAVE CARRIED FORWARD THE LOSS IN SUNDA RAM MUTUAL FUND AMOUNTING TO `.18,51,049/- AND WOULD HA VE SET IT . I.T.A. NO.4075/DEL/10 2/5 OFF AGAINST FUTURE INCOME HAD IT NOT BEEN DETECTED B Y THE ASSESSING OFFICER DURING THE ASSESSMENT PROCEEDINGS, II) SAYING THAT THE ASSESSEES REQUEST FOR SETTING OFF TON LO SS OF `,2,28,633/- AGAINST THE LTCG OF `.3,92,793/- WAS NOT CONSIDERED AND THAT A SUM OF `.16,22,416/- ON ACCOUNT OF DIVIDEND WAS WRONGLY ADDED IN THE TOTAL INCOME OF T HE ASSESSEE. WHEREAS THE SAID LOSS OF `.2,28,633/- WAS DULY SE T OFF AND DIVIDEND AMOUNTING TO `.16,22,416/- WAS NOT ADDED ONLY THE SHORT TERM CAPITAL LOSS OF `.18,51,049/- WAS R EDUCED TO `.2,28,633/- AS PER THE PROVISIONS OF SECTION 94(7). III) IGNORING THE FACT THAT THE LTCG OF `.3,92,793/- WAS BROUGHT TO TAX ONLY WHEN THE ASSESSING OFFICER ASSESSING OFFICER DETECTED IT TO BE CHARGEABLE TO THE TAX DURING THE ASSESSMENT PROCEEDINGS. IV) NOT CONSIDERING THE FACT THAT THE TAX SOUGHT TO BE EV ADED FOR IMPOSING PENALTY IN THE PRESENT CASE WAS RIGHTLY CALCUL ATED BY THE ASSESSING OFFICER AS PER THE EXPLANATION-4 TO THE SEC TION 271(1)( C) OF THE INCOME TAX ACT, 1961. 3. THE LD DR OF THE REVENUE SUPPORTED THE PENALTY OR DER PASSED BY THE ASSESSING OFFICER WHEREAS THE LD AR OF THE ASSESSEE SUPPO RTED THE ORDER OF LD CIT(A). 4. LD AR OF THE ASSESSEE ALSO DRAWN OUR ATTENTION TO PA GES 1-7 OF THE PAPER BOOK WHICH CONTAIN THE COPY OF INCOME TAX RETURN FILED BY THE ASSESSEE IN THE PRESENT YEAR AS WELL AS COMPUTATION OF INCOME FILED BY THE ASSESSEE ALONG WITH THE RETURN OF INCOME AND OTH ER SUPPORTIVE DOCUMENTS REGARDING CAPITAL GAINS ON SALE OF UNITS OF M UTUAL FUNDS ETC. IT IS SUBMITTED BY HIM THAT ADMITTEDLY, AS PER THE SUPP ORTING PAPERS, LOSS OF `.18,15,049/- WAS WORKED OUT ON SALE OF SUNDARA M BONDS SAVER UNITS OF SUNDARAM MUTUAL FUNDS BUT SUCH LOSS WAS NEITHER CLAIMED BY THE ASSESSEE IN THE COMPUTATION OF INCOME SUBMITTED ALON G WITH THE . I.T.A. NO.4075/DEL/10 3/5 RETURN OF INCOME NOR SUCH LOSS WAS CLAIMED IN THE RET URN OF INCOME ITSELF. REGARDING THIS ASPECT THAT LONG TERM CAPITAL G AIN ON SALE OF UTI MASTER GAIN OF `.3,92,793/- WAS CLAIMED AS EXEMPT, IT WAS SUBMITTED THAT THE SAME WAS CLAIMED AS EXEMPT BY MISTAKE WITH THE UNDERSTANDING THAT ANY TRANSACTION IN SALE OF SHARES IS E XEMPT BUT WHEN IT WAS POINTED OUT BY THE ASSESSING OFFICER IN THE COURSE OF ASSESSMENT PROCEEDING THAT STT WAS NOT INVOLVED IN THE R EDEMPTION OF UTI MASTER GAIN, THE ASSESSEE IMMEDIATELY SUBMITTED A REV ISED CALCULATION IN WHICH THE ASSESSEE ADMITTED THAT THIS LON G TERM CAPITAL GAIN OF `.3,92,793/- IS NOT EXEMPT. 6. WE HAVE HEARD THE RIVAL SUBMISSIONS AND HAVE GONE TH ROUGH THE MATERIAL AVAILABLE ON RECORD. WE FIND THAT THE ASSESSIN G OFFICER HAS IMPOSED PENALTY ON THE LONG TERM CAPITAL GAIN ON SALE OF UTI MASTER GAIN OF `.3,92,793/- AND ALSO ON DIVIDEND RECEIPT DI SALLOWABLE U/S 94(7) OF `.16,22,416/- TO BE REDUCED FROM LOSS ON SALE OF UN ITS OF SUNDARAM MUTUAL FUND OF `.18,15,049/-. REGARDING SECOND ITEM I.E. DIVIDEND RECEIPT DISALLOWABLE U/.S 94(7) OF `.16,22,416/-, WE FIND THAT NO DEDUCTION OR SET OFF WAS CLAIMED BY THE ASSESSEE IN THE R ETURN OF INCOME FILED BY HIM ON ACCOUNT OF TOTAL CAPITAL LOSS OF `.18,51,049/- IN THE ORIGINAL RETURN OF INCOME FILED BY THE ASSESSEE AS P ER THE COMPUTATION OF TOTAL INCOME AVAILABLE ON PAGE NO.2 OF THE PAPER BOOK AND ALSO AS PER THE INCOME TAX RETURN FILED BY THE ASSE SSEE, COPY OF WHICH IS AVAILABLE ON PAGE NO.1 OF THE PAPER BOOK. I N THE COURSE OF ASSESSMENT PROCEEDING, WHEN THE ATTENTION OF THE ASSESSEE W AS DRAWN WITH REGARD TO TAXABILITY OF LONG TERM CAPITAL GAIN ON SALE OF UTI MASTER GAIN OF `.3,92,793/- THEN IN THE REVISED COMPUTATION OF INCOME FILED BY THE ASSESSEE, THE ASSESSEE HAS CLAIMED SET OFF OF CAPITAL LOSS FROM SALE OF SUNDARAM MUTUAL FUND UNITS AFTER EXCLUDING THIS A MOUNT OF `.16,22,416/- FROM THE TOTAL LOSS OF `.18,51,049/- AN D SET OFF OF ONLY NET LOSS OF `.2,86,633/- WAS CLAIMED BY THE ASSESSEE. HENCE, THE PENALTY . I.T.A. NO.4075/DEL/10 4/5 IMPOSED BY THE ASSESSING OFFICER WITH REGARD TO THIS AMOU NT OF `.16,22,416/- IS NOT AT ALL JUSTIFIED BECAUSE IN THE O RIGINAL COMPUTATION FILED BY THE ASSESSEE, THE ENTIRE CAPITAL LOSS ON SALE OF SUNDARAM MUTUAL FUND OF `.18,51,049/- WAS IGNORED BY THE ASSESSEE AND NO SET OFF WAS CLAIMED AND IN THE REVISED COMPUTATION ALSO, SET OFF OF CAPITAL LOSS HAS BEEN CLAIMED AFTER REDUCING THE DIVIDEND RECE IPT U/S 94(7) OF `.16,22,416/-. HENCE, UNDER THESE FACTS, THE PENALTY IMPOSED BY THE ASSESSING OFFICER WITH REGARD TO THIS AMOUNT OF `.16,22, 416/- IS NOT AT ALL JUSTIFIED. REGARDING PENALTY IMPOSED ON CAPITAL G AIN ON SALE OF UTI MASTER GAIN OF `.3,92,793/-. WE FIND THAT IT WAS CLAI MED BY THE ASSESSEE AS EXEMPT BUT IT WAS FOUND TAXABLE FOR THE REASO N THAT NO STT WAS INVOLVED. WE ALSO FIND THAT IT IS NOTED BY THE LD CIT(A) IN PAGE NO.5 OF HIS ORDER THAT WHEN THIS FACT WAS BROUGHT TO T HE NOTICE OF THE ASSESSEE DURING ASSESSMENT PROCEEDINGS, HE HAS SUBMITTED A R EVISED CALCULATION IN WHICH THIS STCG OF `.3,92,793/- WAS DE CLARED AS TAXABLE INCOME. CONSIDERING THE FACTS OF THE CASE IN ITS ENTIR ETY, WE ARE IN AGREEMENT WITH LD CIT(A) THAT IT WAS A GENUINE MISTAK E OF THE ASSESSEE TO CLAIM THAT ALL LONG TERM CAPITAL GAIN ON SALE OF SHARE/MUTUAL FUND IS EXEMPT BECAUSE GENERALLY, ALL SUCH TRANSACTIONS ARE SUBJ ECT TO STT RESULTING INTO NO CAPITAL GAIN TAX AND THIS WAS AN EXC EPTION ONLY AND IMMEDIATELY WHEN THIS WAS POINTED OUT BY THE ASSESSING OF FICER, THE ASSESSEE HAS ADMITTED THE MISTAKE AND THEREFORE, IN OUR C ONSIDERED OPINION, PENALTY IS NOT JUSTIFIED IN THE FACTS OF THE PRESENT CASE BECAUSE IT IS NOTED BY THE LD CIT(A) THAT THE ASSESSING OFFICER HAS ACCEPTED IN THE ASSESSMENT ORDER THAT ALL THE FACTS RELATING TO LONG TERM CAPITAL GAIN OR SHORT TERM CAPITAL LOSS AND INCOME FROM DIVIDE ND WERE DISCLOSED BY THE ASSESSEE IN THE DOCUMENTS ENCLOSED WITH T HE RETURN OF INCOME AND IN THE REVISED COMPUTATION OF INCOME FILE D BY THE ASSESSEE DURING ASSESSMENT PROCEEDINGS. UNDER THESE FACTS, EXPLANA TION (1) TO SECTION 271(1)( C) IS NOT APPLICABLE BECAUSE THE ASSESSEE COULD GIVE AN EXPLANATION REGARDING HIS FAILURE WHICH WAS NOT FOUND FALSE AND WE FEEL . I.T.A. NO.4075/DEL/10 5/5 THAT THE SAME WAS BONA FIDE AND SINCE ALL THE FACTS R ELATING TO THE SAME AND MATERIAL TO THE COMPUTATION HAVE BEEN DISCLO SED BY THE ASSESSEE, THIS EXPLANATION IS NOT APPLICABLE. WE, THEREFO RE, DECLINE TO INTERFERE IN THE ORDER OF LD CIT(A). 7. IN THE RESULT, THE APPEAL FILED BY THE REVENUE IS DISMISSED. 8. ORDER PRONOUNCED IN THE OPEN COURT ON THE DAY OF 11TH FEBRUARY, 2011. SD/- SD/- (R.P. TOLANI ) (A.K. GARODIA) JUDICIAL MEMBER ACCOUNTANT MEMBER DT. 11.2.2011. HMS COPY FORWARDED TO:- 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT 4. THE CIT (A)-, NEW DELHI. 5. THE DR, ITAT, LOKNAYAK BHAWAN, KHAN MARKET, NEW DEL HI. TRUE COPY. BY ORDER (ITAT, NEW DELHI).